Nasdaq 100 Prices Could Plunge as Biden’s Presidency Threatens Increased Stimulus and Taxes

The recent announcement that President-elect Joe Biden is considering a $1.9 trillion stimulus package has swept the momentum out of the tech-heavy Nasdaq 100 (NDX), at least in the near-term.

The index has fallen by about 2% from its recent all-time high at 13110 on January 8, as the possibility of additional stimulus measures sends bond yields higher and could precipitate a sectoral rotation from tech to growth stocks.

Biden’s aid bill makes room for an additional $1,400 in direct payments to most US citizens, increased unemployment benefits, funding of state and local governments, and additional spending to boost the distribution of coronavirus vaccines.

Meanwhile, Biden’s stance on a tax hike has also added to the NDX’s recent weakness, as he reiterated that “where we are making permanent investments, as I said on the campaign, we will pay for them by making sure that everyone pays their fair share in taxes.” The charismatic President-elect added that he plans on doing this by “closing tax loopholes for companies that ship American jobs overseas or that allow American companies to pay zero in federal income taxes.”

However, Senate Republicans will probably prove a hard nut to crack and hinder these proposed policies from getting passed. However, Democrats could bypass this hurdle by invoking the budget reconciliation process to pass tax and fiscal matters on a majority basis. As we know, the Dems currently hold more power than the Republicans in Washington, which should be good for their cause.

That said, the possibility of increased taxation and upbeat bond yields could thwart any significant gains for the NAS100 in the near-term.

Nasdaq 100 (NDX) Value Forecast — January 15

NDX Major Bias: Sideways

Supply Levels: 13000, 13100, and 13200.

Demand Levels: 12830, 12793, and 12650.

With the fundamental factors surrounding the NDX, it is unlikely that we will see a bounce to the ATH at 13110 any time soon. However, the prospects of a sustained downside move seem equally unlikely at this time. That said, the Nasdaq 100 is likely to remain rangebound between 13000 and 12800 in the meantime. We should expect to see a modest dip to the lower-12800 in the coming hours.

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